The 44-year-old was expected to make the third instalment in the superhero franchise, which has to date grossed $1.2 billion, however movie bosses are now on the hunt for a new director.

Explaining his decision to walk away from the project, Favreau said that directing ‘Magic Kingdom’ would give him the opportunity to ‘find something that lights a fire’, and allow him to ‘blow people away’.

Favreau, who has worked on family films before, most notably ‘Elf’, also reasoned that he more enjoys making movies for kids.

‘It’s great to be able to connect parents with children both emotionally and through humour. I look forward to exploring family entertainment once again and examining the specifics of our day-to-day lives against the backdrop of an extraordinary adventure,’ he said.

The 44-year-old confirmed that he will remain as a producer on Marvel’s 2012 adaptation of ‘The Avengers’ which will release May 4, 2012, but added that he is now looking forward to seeing what somebody else can do with the hugely popular ‘Iron Man’ franchise.